Correlation, Regression and Index Numbers - One Line Questions
1.
What is the range of possible values for the Pearson correlation coefficient? —
-1 to +1
2.
An index number of 120 for a specific commodity means its current value is: —
20% higher than its base period value
3.
If the regression line is Y = 5 + 2X, and X = 3, what is the predicted value of Y? —
11
4.
If the correlation coefficient between two variables is 0, it implies: —
There is no linear relationship between the variables
5.
In a regression context, multicollinearity refers to: —
A strong correlation among independent variables
6.
If the correlation coefficient between two variables is 0.1, this indicates: —
A very weak positive linear relationship
7.
In a scatter plot, points that are tightly clustered around a straight line indicate: —
A strong correlation
8.
A correlation coefficient of -0.8 suggests: —
A strong negative linear relationship
9.
A higher R-squared value indicates: —
A stronger fit of the regression model
10.
Which of the following is a common application of index numbers? —
Measuring inflation
11.
When conducting regression analysis, it is assumed that the residuals (errors) are: —
Independent and normally distributed
12.
Which statistical method is used to model the relationship between a dependent variable and one or more independent variables? —
Regression Analysis
13.
When interpreting a correlation coefficient, it's important to remember that: —
Correlation does not imply causation
14.
What is the primary difference between correlation and regression? —
Correlation measures association, while regression predicts one variable from another.
15.
If the Consumer Price Index (CPI) for a given year is 150, it means that prices, on average, have: —
Increased by 50% compared to the base year
16.
Which method is used to find the 'best-fitting' line in linear regression? —
Least Squares Method
17.
If the regression coefficient (slope) is negative, it implies that as the independent variable increases, the dependent variable tends to: —
Decrease
18.
In a multiple regression model, the adjusted R-squared is used because: —
It penalizes the addition of non-significant predictors
19.
What is the primary limitation of using only correlation to describe the relationship between two variables? —
It does not provide a predictive model
20.
What is a potential disadvantage of the Paasche index? —
It is difficult to calculate as current period quantities are needed
21.
If the correlation between variable A and variable B is high, and the correlation between variable B and variable C is high, what can be inferred about the correlation between A and C? —
It cannot be determined without more information
22.
What is a potential disadvantage of the Laspeyres index? —
It overstates price increases due to substitution effects
23.
Fisher's Ideal Index is the geometric mean of: —
Laspeyres and Paasche price indices
24.
Which index number formula is generally considered to be a better measure of price changes because it uses current period weights? —
Paasche Index
25.
Which method is used to construct a weighted index where both base and current period quantities are used as weights? —
Fisher's Ideal Method
26.
Which regression technique is used when the dependent variable is categorical? —
Logistic Regression
27.
The primary goal of regression analysis is to: —
Predict the value of a dependent variable based on independent variable(s)
28.
An index number represents a value relative to a: —
Base period value
29.
In multiple regression, the dependent variable is predicted by: —
Two or more independent variables
30.
What does a correlation coefficient of +1 indicate? —
Perfect positive linear correlation
31.
In regression analysis, extrapolation refers to: —
Predicting values outside the range of the observed data
32.
Which type of index number gives more weight to items with larger quantities consumed or produced? —
Weighted Aggregate Index
33.
Which index number is designed to be an 'ideal' measure by being a geometric mean of Laspeyres and Paasche indices? —
Fisher's Ideal Index
34.
Which of the following is a measure of the strength and direction of a linear relationship between two quantitative variables? —
Correlation Coefficient
35.
The Paasche price index uses weights from which period? —
The current period
36.
The Laspeyres price index uses weights from which period? —
The base period
37.
Which of the following is a key assumption of linear regression? —
The relationship between variables is linear
38.
In a simple linear regression equation, Y = a + bX, what does 'b' represent? —
The slope (or regression coefficient)
39.
The base period in an index number is: —
A period chosen as a reference point
40.
What does a p-value in regression analysis typically test? —
The significance of individual predictor variables
41.
A correlation matrix displays: —
The pairwise correlation coefficients between multiple variables
42.
The 'a' in the simple linear regression equation Y = a + bX represents: —
The predicted value of Y when X is zero
43.
What does the coefficient of determination (R-squared) measure in regression analysis? —
The proportion of variance in the dependent variable that is predictable from the independent variable(s)
44.
What does a standard error of the regression coefficient indicate? —
The precision of the estimated regression coefficient
45.
What is an index number used for? —
To compare the level of a variable at different points in time or locations
46.
What is the main purpose of calculating a moving average index? —
To smooth out short-term fluctuations and highlight longer-term trends
47.
The Spearman rank correlation coefficient is used when: —
Variables are ordinal or non-normally distributed
48.
A price index that measures the change in prices of a basket of goods and services over time is known as a: —
Price Index
49.
Which of the following is NOT a type of index number? —
Gross Domestic Product (GDP)